Gold Sales at Perth Mint Advance in October as Prices Tumble

By Phoebe Sedgman -
Nov 6, 2013

Gold sales from Australia’s Perth
Mint, which refines most of the bullion from the second-largest
producer, rose in October as a drop in prices to a three-month
low spurred demand and the mint filled a backlog of orders.

Sales of coins and minted bars climbed 13 percent to 77,255
ounces last month from 68,488 ounces in September, according to
data from the mint. While demand in October more than doubled
from 30,430 ounces in August, sales were 31 percent lower than
this year’s peak in April, when gold tumbled into a bear market.

Bullion is set to snap 12 years of gains as some investors
lost faith in the metal as a store of value amid speculation the
U.S. Federal Reserve will curb stimulus. Gold advanced 70
percent from December 2008 to June 2011 as the Fed pumped more
than $2 trillion into the financial system to boost the economy.
While investors sold bullion at a record pace from exchange-traded products this year, sales of coins by the U.S. Mint have
surpassed the total for all of 2012.

“There’d be people buying while the price is low,” said
Ron Currie, the Perth Mint’s sales and marketing director.
“We’re getting a lot more product out the door because of
previous orders that we hadn’t been able to supply because of
capacity,” he said.

Bullion for immediate delivery lost 21 percent this year to
$1,320.19 an ounce at 4:59 p.m. in Singapore. Prices dropped to
$1,251.85 on Oct. 15, the lowest since July 10. The Standard &
Poor’s GSCI gauge of 24 commodities fell 5.6 percent since the
start of January and the MSCI All-Country World Index of
equities gained 17 percent.

Investor Sales

The U.S. Mint sold 755,500 ounces of American Eagle coins
as of Nov. 1, compared with 753,000 ounces in all of 2012,
according to data on the mint’s website. The mint sold 48,500
ounces in October from 13,000 in September and 11,500 in August,
the lowest since July 2007. Coin sales last month were still 77
percent lower than in April, when they surged to a 40-month high
of 209,500 ounces. The Perth Mint sold 112,575 ounces in April.

As bar and coins sales increased, demand waned for ETPs
backed by the metal. Holdings tumbled 29 percent this year to
1,875.04 metric tons on Nov. 4, according to data compiled by
Bloomberg. Assets have shrunk every month this year, the worst
run on record.

Jeffrey Currie, head of commodities research at Goldman
Sachs Group Inc. who forecast this year’s rout, said Oct. 8 that
gold is a “slam dunk” sell in 2014 and will decline as the
U.S. economy improves. Bullion will extend losses into 2014 amid
expectations that the Fed will reduce its $85 billion monthly
bond-buying program, Morgan Stanley said last month.

Fed Stimulus

Fed policy makers unexpectedly refrained from slowing the
asset purchases in September, and economists surveyed by
Bloomberg Oct. 17-18 said that the central bank will probably
maintain that level until March.

The Perth Mint, which began operations in 1899, is owned by
the Western Australian government and refines between 300 tons
and 400 tons each year, including mined and scrap gold,
according to its website. Australia is the world’s biggest gold
producer after China.